Wednesday 21 February 2018

Nama could face C&AG probe into €1.5bn Project Tolka sale

Burlington Plaza is one of Project Tolka's most valuable assets
Burlington Plaza is one of Project Tolka's most valuable assets
Ronald Quinlan

Ronald Quinlan

Nama is facing the prospect of an investigation by the Office of the Comptroller & Auditor General (C&AG) into the wsale of its €1.5bn Project Tolka portfolio.

Fianna Fáil finance spokesman Michael McGrath told the Irish Independent that he intends to write to the State's public spending watchdog in relation to the "apparent involvement" of certain of Project Tolka's debtors in selecting potential bidders for the loan book.

"I believe that it is a transaction that the C&AG should examine," Mr McGrath said. "I intend to write to the C&AG to bring to his attention what I would regard as some peculiar aspects to this transaction, primarily the apparent involvement of the debtors in selecting potential bidders for the portfolio.""That's not a practice that I understood Nama was involved in, but it has been confirmed in the Dáil reply from finance minister Michael Noonan, that the debtors did indeed have an input, and it would appear, a significant input in the selection of those who might be involved in the bidding process."

Project Tolka, which consisted of loans mainly linked to developers John Flynn, Paddy Kelly and the Dublin-based McCormack family, who control the property investment vehicle Alanis, was acquired last January by the US investment firm, Colony Capital, for a sum in the region of €455m. The price paid by Colony represented a discount of approximately 70 cent in the euro based on the portfolio's €1.5bn par value.

Among Project Tolka's most significant assets is the Burlington Plaza office complex on Dublin's Burlington Road. With an estimated value of €250m, it has high-profile tenants including Sky Ireland, Amazon and Bank of Ireland.

Other valuable assets tied to Project Tolka include the Clarion Hotel in Dublin's Liffey Valley, the Belfield headquarters of betting giants Paddy Power Betfair and the former Harcourt Street children's hospital, which is occupied by Dublin law firm BCM Hanby Wallace.

In acquiring the Project Tolka portfolio, Colony fended off bids from Lone Star and Madison International Realty. A source familiar with the loan sale process said Nama selected the three parties as bidders on the basis that their participation would be sufficient to guarantee 'competitive tension' and deliver a price above the reserve, which is understood to have been set in the region of €450m.

While 16 parties with a potential interest in acquiring the Project Tolka portfolio were identified, the same source said a number were deemed unsuitable as they were perceived to be "conflicted". One potential bidder is understood to have been ruled out of the process on the grounds that Alanis, the property investment vehicle controlled by one of Project Tolka's major borrowers, the McCormack family, already acted for it. Another potential bidder was deemed to be unsuitable as they were involved in litigation with another of Project Tolka's main debtors, the developer John Flynn.

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